New Delhi: Stemcor Holdings Ltd., seeking to sell its Indian iron ore mine and pellet plant to repay about $1.2 billion of debt, removed the managing director of the local unit after he sought to buy the assets.

Bill Attenborough replaced Matthew Stock, who was given leave along with other members of the management in India, spokesman Charles Armitstead said in an e-mail statement. The London-based trader, which is being wooed by India’s biggest steelmakers for its local assets, rejected a unilateral buyout offer from Stock and director Vineet Mehra, calling for open bids last month.

Removing the head of the Indian operations may help Stemcor ensure a transparent sale process and get a higher price. Curbs on mining in the last three years and government delays in obtaining permits have prompted India’s steelmakers to seek control of existing raw material sources. Tata Steel Ltd., Jindal Steel and Power Ltd. and JSW Steel Ltd. have all said they will bid for Stemcor’s assets.

The managers have more information about the asset and perhaps wield more influence on the owner, said Prasad Baji, a metals analyst at Edelweiss Financial Services Ltd. in Mumbai. That’s a tricky situation for the other bidders.

Stock and Mehra declined to comment, citing confidentiality agreements signed with Stemcor.

India units

Closely held Stemcor owns the mine and the pellet plant through units Aryan Mining & Trading Corp. and Brahmani River Pellets Ltd., according to a company presentation. Stemcor also owns a slurry pipeline connecting the mine to the factory.

The scramble for Stemcor is because of its iron ore mines, said Giriraj Daga, an analyst at Mumbai-based Nirmal Bang Equities Pvt. The iron ore mine and the pellet plant together should fetch a fair valuation of $1.3 billion.

The mine, situated in the eastern state of Odisha, can produce 5 million metric tons of iron ore a year, while the pellet plant has an annual capacity of 4 million tons. The plant, which can turn low-grade iron ore fines into chunks for use in blast furnaces, is the added attraction, said Gunjan Aggarwal, an analyst at commodities consulting firm CRU Group.

‘Next door’

Tata Steel, India’s biggest mill, has expressed interest in Stemcor’s assets because its mine is next door to a 6 million-ton plant Tata is building in Odisha, chief financial officer Koushik Chatterjee said 14 August. Jindal Steel, which started its 2.5 million ton mill in Odisha last month, would bid for Stemcor’s assets, managing director Ravi Uppal said 5 August. The company has deferred expansion plans at Odisha because of a lack of raw material.

Production at JSW’s biggest mill in Karnataka state fell to as low as 30% of capacity two years ago after India’s top court imposed mining restrictions in the southern state for environmental breaches. The Mumbai-based company has since increased factory use to 85% using low-grade ore, chief financial officer Seshagiri Rao said 4 September.

Stemcor failed to repay an $850 million credit line earlier this year because of waning sales and demand for steel. The company appointed Zolfo Cooper LLP’s Simon Freakley as its chief restructuring officer and appointed Goldman Sachs Group Inc. to sell its mining assets in India. The company signed a 100-day standstill pact with lenders, it said 20 June. Under the accord, lenders agree not to demand repayment of the loan for a certain period. BLOOMBERG